The main areas where the CAP can be revised better to contribute to Europe’s growth and jobs agenda are:
- Direct payments:
The Single Payment Scheme still allows for numerous exceptions in order to cater for specific regional situations. Fischer Boel wants to put an end to such special arrangements to reduce administrative burdens.
Furthermore, increased transparency regarding the recipients of EU aid has revealed that funds to support European farmers are not always handed out in an effective and efficient manner. Indeed, data shows that EU funds mainly benefit big businesses, who receive excessively large amounts, while administration costs are being pushed up because of the need to make thousands of tiny payments to small-scale farmers.
Thus, in a July 2006 speech, the Commissioner envisaged that it may be necessary to "impose top and bottom limits to what farmers can receive under the Single Payment Scheme", when reviewing the CAP in the longer term.
- Common Market Organisations:
CMOs are sets of rules that govern the EU's markets for given agricultural products, such as beef or cereals. There are currently 21 individual CMOs, but the Commission will present a plan, in December 2006, to replace them with a single one, with harmonised rules on intervention, import tariff quotas, export refunds, safeguard measures and state aids.
The new rules could lead to the elimination of production quotas that remain in certain market organisations, such as milk quotas. Fischer Boel explained: “If we do not give the possibilities for producers to increase production without having to invest [in expensive milk quotas]…we put constraints on the sector to develop and be competitive in future.”
- Sectoral Reforms:
A number of sensitive sectors were left out of the 2003 reform, including sugar, wine, bananas and other fruits and vegetables. However, outdated rules, excessive production quotas and overly generous subsidies, have encouraged uncompetitive farmers to produce huge surpluses, forcing the EU to spend fortunes on storage and transformation.
The situation has also generated loud complaints about dumping from the EU’s trade partners.
Thus, despite strong opposition from European farmers (see EurActiv 22 November 2005), who will suffer large income losses due to the loss of EU subsidies, the sugar sector has already been reformed. The new regime came into force in July 2006.
Wine, bananas and fruit and vegetables are currently under discussion.
